Self-Enforcing International Agreements and Domestic Policy Credibility
AbstractWe explore the relationship between international policy coordination and domestic policy credibility when both must be self-supporting. Our arguments are presented in the context of a two-country, two-period model of dynamic emission abatement with transboundary pollution, where government policies suffer from a time-consistency problem. In the absence of repeated interaction, any form of coordination - between governments, and between governments and their respective private sectors - improves policy making. Nevertheless, under repeated interaction international policy spillovers can make it possible to overcome the domestic credibility problem; and, conversely, the inability to precommit to policy domestically can help support international policy cooperation.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 988.
Date of creation: 2003
Date of revision:
policy commitment; self-enforcing international agreements;
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Magnus Lodefalk & John Whalley, 2002. "Reviewing Proposals for a World Environmental Organisation," The World Economy, Wiley Blackwell, vol. 25(5), pages 601-617, 05.
- Joseph Farrell and Eric Maskin., 1987.
"Renegotiation in Repeated Games,"
Economics Working Papers
8759, University of California at Berkeley.
- Bagwell, K. & Staiger, R.W., 1994.
"Multilateral Tariff Cooperation During the Formation of Regional Free Trade Areas,"
9403, Wisconsin Madison - Social Systems.
- Kyle Bagwell & Robert Staiger, 1994. "Multilateral Tariff Cooperation During the Formation of Regional Free Trade Areas," International Trade 9410001, EconWPA.
- Kyle Bagwell & Robert W. Staiger, 1993. "Multilateral Tarriff Cooperation During the Formation of Regional Free Trade Areas," NBER Working Papers 4364, National Bureau of Economic Research, Inc.
- Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-37, December.
- Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
- Kiminori Matsuyama, 1987.
"Perfect Equilibria in a Trade Liberalization Game,"
738, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Giovanni Maggi, 1999. "The Role of Multilateral Institutions in International Trade Cooperation," American Economic Review, American Economic Association, vol. 89(1), pages 190-214, March.
- Kehoe, Patrick J, 1989. "Policy Cooperation among Benevolent Governments May Be Undesirable," Review of Economic Studies, Wiley Blackwell, vol. 56(2), pages 289-96, April.
- Rogoff, Kenneth, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, MIT Press, vol. 100(4), pages 1169-89, November.
- Laffont, Jean-Jacques & Tirole, Jean, 1996.
"Pollution permits and environmental innovation,"
Journal of Public Economics,
Elsevier, vol. 62(1-2), pages 127-140, October.
- Stokey, Nancy L, 1989. "Reputation and Time Consistency," American Economic Review, American Economic Association, vol. 79(2), pages 134-39, May.
- Paul Krugman, 1989. "Is Bilateralism Bad?," NBER Working Papers 2972, National Bureau of Economic Research, Inc.
- Pearce, David & Stacchetti, Ennio, 1997. "Time Consistent Taxation by a Government with Redistributive Goals," Journal of Economic Theory, Elsevier, vol. 72(2), pages 282-305, February.
- Brunnetti, Aymo & Kisunko, Gregory & Weder, Beatrice, 1997.
"Credibility of rules and economic growth : evidence from a worldwide survey of the private sector,"
Policy Research Working Paper Series
1760, The World Bank.
- Brunetti, Aymo & Kisunko, Gregory & Weder, Beatrice, 1998. "Credibility of Rules and Economic Growth: Evidence from a Worldwide Survey of the Private Sector," World Bank Economic Review, World Bank Group, vol. 12(3), pages 353-84, September.
- James M. Poterba, 1991. "Tax Policy to Combat Global Warming: On Designing a Carbon Tax," NBER Working Papers 3649, National Bureau of Economic Research, Inc.
- Robert E. Lucas Jr. & Nancy L. Stokey, 1982.
"Optimal Fiscal and Monetary Policy in an Economy Without Capital,"
532, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Lucas, Robert Jr. & Stokey, Nancy L., 1983. "Optimal fiscal and monetary policy in an economy without capital," Journal of Monetary Economics, Elsevier, vol. 12(1), pages 55-93.
- Rogoff, Kenneth, 1985. "Can international monetary policy cooperation be counterproductive?," Journal of International Economics, Elsevier, vol. 18(3-4), pages 199-217, May.
- Everaert, Greetje M.M., 2004.
"The Political Economy of Restructuring and Subsidisation: An International Perspective,"
BOFIT Discussion Papers
12/2004, Bank of Finland, Institute for Economies in Transition.
- Greetje Everaert, 2003. "The Political Economy of Restructuring and Subsidisation: An International Perspective," LICOS Discussion Papers 13003, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
- Maggi, Giovanni & Rodriguez-Clare, Andres, 2005.
"A Political-Economy Theory of Trade Agreements,"
CEPR Discussion Papers
5321, C.E.P.R. Discussion Papers.
- Conconi, Paola & Perroni, Carlo, 2006.
"Do Credible Domestic Institutions Promote Credible International Agreements?,"
CEPR Discussion Papers
5762, C.E.P.R. Discussion Papers.
- Conconi, Paola & Perroni, Carlo, 2009. "Do credible domestic institutions promote credible international agreements?," Journal of International Economics, Elsevier, vol. 79(1), pages 160-170, September.
- Paola Conconi & Carlo Perroni, 2009. "Do Credible Domestic Institutions Promote Credible International Agreements?," ULB Institutional Repository 2013/98549, ULB -- Universite Libre de Bruxelles.
- Agur Itai, 2008.
"The US Trade Deficit, the Decline of the WTO and the Rise of Regionalism,"
Global Economy Journal,
De Gruyter, vol. 8(3), pages 1-34, September.
- Itai Agur, 2007. "The US Trade Deficit, the Decline of the WTO and the Rise of Regionalism," Economics Working Papers ECO2007/17, European University Institute.
- Kamal Saggi & Halis Murat Yildiz, 2011.
"Bilateral Trade Agreements and the Feasibility of Multilateral Free Trade,"
Review of International Economics,
Wiley Blackwell, vol. 19(2), pages 356-373, 05.
- Saggi, Kamal & Yildiz, Halis Murat, 2008. "Bilateral trade agreements and the feasibility of multilateral free trade," MPRA Paper 17561, University Library of Munich, Germany, revised 26 Jun 2009.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra).
If references are entirely missing, you can add them using this form.